In a couple of recent posts, we have helped you to distinguish the differences between certain types of loans:
So, you now know the difference between a conforming loan and a conventional loan, as well as the difference between a conforming and a non-conforming loan. But what is the difference between a conventional and non-conventional loan?
A conventional mortgage is simply one with no government agency backing. It can be conforming or non-conforming.
A non-conventional mortgage is one that is backed by a government agency. Examples of non-conventional mortgages include:
- FHA: An FHA mortgage is a type of home loan insured by the Federal Housing Administration. With its easy credit qualifications, low down payment requirement, and affordable rates, it is the first type of mortgage that many first time homebuyers consider. But repeat homebuyers also can purchase homes using FHA loans. You do need to pay for mortgage insurance with this type of loan.
- VA: A VA mortgage is a type of home loan insured by the Department of Veterans Affairs. Like an FHA mortgage, a VA home loan is easy to qualify for so long as you meet the service requirements, and features affordable rates. But instead of a low down payment, it requires no down payment and no PMI.
- USDA: A USDA mortgage is a type of loan guaranteed by the US Department of Agriculture. Qualification for the program is limited to those who do not exceed the income threshold. Similar to the VA mortgage program, the USDA home loan program does not require a down payment. As with both other programs we have discussed, you can qualify for affordable rates even without having a perfect credit score or DTI ratio.
Each type of conventional or non-conventional mortgage has different advantages and disadvantages.
But any one of them can be an ideal choice if it is the right match for your needs.
Discover More About the Different Types of Mortgages
If you have questions about conventional or non-conventional mortgages, Lending Bankers Mortgage can answer them. Together, we can go over your options and help you figure out the right type of home loan for your requirements.
If you are ready to begin, you can give us a call at (786) 220-1100 to schedule your consultation.